Correlation Between Veralto and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Veralto and KAR Auction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Veralto and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veralto and KAR Auction Services, you can compare the effects of market volatilities on Veralto and KAR Auction and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Veralto with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veralto and KAR Auction.
Diversification Opportunities for Veralto and KAR Auction
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Veralto and KAR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Veralto and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services and Veralto is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Veralto are associated (or correlated) with KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of Veralto i.e., Veralto and KAR Auction go up and down completely randomly.
Pair Corralation between Veralto and KAR Auction
Given the investment horizon of 90 days Veralto is expected to under-perform the KAR Auction. But the stock apears to be less risky and, when comparing its historical volatility, Veralto is 2.14 times less risky than KAR Auction. The stock trades about -0.02 of its potential returns per unit of risk. The KAR Auction Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,721 in KAR Auction Services on September 2, 2024 and sell it today you would earn a total of 299.00 from holding KAR Auction Services or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veralto vs. KAR Auction Services
Performance |
| Timeline |
| Veralto |
| KAR Auction Services |
Veralto and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veralto and KAR Auction
The main advantage of trading using opposite Veralto and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veralto position performs unexpectedly, KAR Auction can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KAR Auction will offset losses from the drop in KAR Auction's long position.| Veralto vs. CRA International | Veralto vs. ICF International | Veralto vs. Forrester Research | Veralto vs. Huron Consulting Group |
| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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